The Zip Co Ltd (ASX: ZIP) share price is under the spotlight today after announcing it’s ending its New Zealand operations.
Zip is one of the larger buy now, pay later operators. Its core operations are in the US and Australia.
End of New Zealand operations
Zip announced in an ASX update that after a strategic review of its business portfolio, it has decided to commence an orderly wind down of its New Zealand operations.
The ASX buy now, pay later company said the decision reflects its strategic focus on investing in its Australian and US businesses, which continue to demonstrate “strong momentum and profitable growth”.
Zip said it recognises the contribution of its New Zealand team and is committed to “supporting its employees, customers, merchants and business partners throughout the transition”.
The company then said the financial impact of the wind down is expected to be “immaterial” to the Zip Group.
Is the Zip share price a buy?
The business has shrunk its geographic footprint significantly over the last few years, to now just focusing on Australia and the US.
It makes sense – profit generation is now very important with interest rates much higher. Zip needs certain scale in a market to make money and it seemingly hadn’t achieved that in New Zealand.
Zip is experiencing significant volume in Australia and US, though US appears to be the key market now.
In the FY26 third quarter update – the latest update – Zip reported total transaction value (TTV) of $3.05 billion in the US (up 29% year on year) and $937 million of TTV in ANZ (up 4.8% year on year). I presume most of that ANZ figure came from Australia.
Australia remains a more profitable market for Zip in profit margin percentage terms. The company had an overall cash net transaction margin (NTM) of 3.9% in the third quarter, with the US NTM being 3.5% and the ANZ NTM being 5.5%.
The one area that looks concerning is the rising net bad debts of TTV – it was 1.64% in the third quarter of FY25, 1.8% in the second quarter of FY26 and 1.93% in the third quarter of FY26. The company’s profit is being eroded if that statistic keeps rising.
I’m not sure if the Zip share price is a buy today after it has recovered a lot of ground in the last few weeks – it depends on how much further it can grow earnings in the US over the longer-term. I will say that there are other ASX growth shares I’d rather buy.
